Even though the north of England has long since ceased to be the “insider tip” of choice amongst foresighted property investors, it still offers a very desirable combination of high demand for rental property and great affordability in the property market.
This means it continues to be an excellent investment location which consistently provides very solid returns. The main reason for this is a combination of excellent demographics and effective management of the housing market.
The north is a great place for young people, especially students
Most cities have universities, but the north of England can probably lay claim to being the only place in the world which has both a high concentration of prestigious universities and outstanding affordability for students from all countries.
There are certainly more famous university towns in the UK but students living in (or even within convenient travelling distance of) places such as Oxford, Cambridge, St Andrews and, of course, London (or the more comparable destinations of Edinburgh and Glasgow) are very much paying for the privilege of being in these locations.
Students in the north of England, by contrast, get to attend internationally-recognized universities, in cities with all the amenities you’d expect and not only do they pay much less to keep themselves comfortably, but they also have access to solid employment opportunities for topping up (or possibly replacing) student loans and/or parental support.
Graduates often stay in the north of England (or make their way to it from elsewhere) for essentially the same reasons.
They can tap into solid employment prospects (or start their own businesses) in a location where they will actually be able to keep a decent percentage of their income for themselves rather than having to hand a significant chunk of it straight over to a landlord or mortgage lender.
Large-scale construction programmes benefit investors as well as renters
The main reason why it is so affordable to rent in the north of England is because landlords can still buy property at reasonable prices, which enables them to keep rents attractive while still earning good yields for themselves.
To put this in context, research from investment portal One & Only Pro reveals that the top seven university cities offering the most lucrative property investment returns are all located in the north of England or the Midlands.
While this may not come as a surprise to many investors, what may come as a surprise is the order in which they were ranked. The top performers by far were Newcastle and Nottingham, these were followed by Leeds, Sheffield and only then Manchester, although that “only” would still make London-based investors green with envy.
The 10 best properties in the city have an average yield of 17.76% (although this is unusual, yields of between 5% and 10% are more common, even that, however, is comfortably ahead of average yields in London).
What is particularly appealing for investors is that this affordability is not due to lack of demand, quite the opposite, it’s due to the fact that local authorities have recognized the demand and hence the need to satisfy it and have therefore encouraged large-scale home building, typically in the form of flats (some of which are totally suitable for family living) to preserve valuable public space.
Insight provided by Manchester’s Hopwood House Property Investments